Hassan presents compromise budget plan, wants lawmakers to take it up in September

CONCORD, New Hampshire — Gov. Maggie Hassan said Thursday she's willing to accept business tax cuts backed by Republicans in exchange for an increase in the cigarette tax and car registration fees, but GOP lawmakers were quick to dismiss her proposal as political gamesmanship.

It's been roughly a month since Hassan vetoed the Republican-backed $11.3 billion spending plan, largely because it reduced the rates of the state's two largest business taxes, didn't include a negotiated pay raise for state employees and failed to reauthorize Medicaid expansion beyond 2016. The state is now operating on a 6-month spending plan and compromise has been elusive.

"While people on both ends of either party may still want a different plan than the one I am proposing, this plan attempts to address the concerns of both parties," Hassan said while flanked by Democratic lawmakers.

Hassan has been rejecting attempts to lower business taxes because she says the cuts are "unpaid for" and would leave a hole from lost revenue in future budgets. The plan she outlined Thursday includes roughly $114 million in new revenue that she uses to offset a cut in the rate of the business profits tax, fund the state employee pay raise and increase spending in travel and tourism, substance abuse treatment and prevention and several other programs. It relies on $32 million from a 21-cent hike in the cigarette tax and nearly $20 million from a $5 increase in car registration fees.

Her plan also includes a small amount of money to gather data on the effects of Medicaid expansion. Lawmakers say they want to debate whether to continue the program next year, when they have a better picture of how it's been working. Her plan projects having enough money to pay for the program in 2017 should the Legislature vote to reauthorize it next year.

House Speaker Shawn Jasper said no one from his office saw Hassan's plan until Thursday morning and that the proposal differs little from what Hassan proposed during earlier budget negotiations.

"There was no sincere attempt to work with us here, this is strictly politics," he said. "Clearly, there's no way that we could get the taxes she's proposed through the House. It was very difficult to get anything through the House, even in the way of adjustments that could be seen as just keeping up with inflation. To talk about a 21-cent increase in the cigarette tax and $5 on the registration fee, those are just issues that simply there is no support for within the House."

Republican Senate President Chuck Morse agreed.

"I honestly believe we reduced business taxes because we wanted to grow the economy in the state of New Hampshire. Proposing $100 million in new taxes and revenues is not going to work for the Senate," he said. Like Jasper, he criticized the governor for not sharing her plan with Republican leaders before her news conference, saying she wanted to "negotiate in the press."

In addition to the cigarette tax hike and increase in car registration fees, Hassan also wants to give the state more power to audit what business owners are claiming as compensation rather than profit to avoid taxes. She predicts additional auditing will bring in $20 million over two years.

Other new revenues include $5 million in projected savings from the short-term spending plan and $26 million in new revenue based on normal growth.

Hassan's plan reduces the rate of the business profits tax from 8.5 percent to 7.9 percent by the end of 2016 and increases the threshold for paying the business enterprise tax, which she said would reduce the tax burden on 5,500 small businesses. It also allows for a change to the tax code sought by gym company Planet Fitness.

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